Indian Council for Research on International Economic Relations

Seminar Details

08 Aug 2006

The Doha Development Agenda: Prospects and India’s Role
 
 
8 August , 2006
 
An interactive session with Shri Kamal Nath was jointly organized by ICRIER and FICCI on August 8, 2006 entitled ‘The Doha Development Agenda: Prospects and India’s Role’. The Commerce and Industry Minister primarily addressed the issues of India’s current and future role in the process of strengthening the multilateral trading system, in the light of the recent failure of the G6 meeting in Geneva. He said that the Indian economy was growing very rapidly and has great interests and support for a “rule based multilateral system”. 

Mr Nath pointed out that India has unilaterally moved forward in all areas of the WTO negotiations such as unbinding of services, cutting down industrial tariffs and moving ahead on NAMA. He said “we have moved ahead in the edifice of the multilateral system encompassing the most crucial issues in development”. He said that the conditions and available inputs, and therefore the mindsets, during the Doha Round is considerably different from the Uruguay Round. The global economic architecture has changed considerably since the previous round and there has been a paradigm shift in global trade, which is why India has also moved ahead. Mr Nath stressed that one of the reasons for the success of India’s reforms was that they had been India specific and not dependent on the World Bank or the IMF prescriptions. 

The G6 meeting in July, Mr Nath said, was the first time the ministers met after the G8 Summit in St. Petersburg where the leaders had agreed to flexibilities and to do their utmost for the success of the Doha Round. The G6 meeting had as its background the Doha Declaration that laid down the objectives of the Round, as well as the July 2004 Framework Agreement and the Hong Kong Declaration that together made up the architecture of the negotiations. Mr Nath opined that the troublesome part that led to the failure of the meeting was not the gap in numbers but the gap in political mindsets as many developed countries do not seem to subscribe to the current architecture. 

Mr Nath said that main issue was of fair trade and not free trade, but with the existing distortions, trade was not fair and it was not possible to strengthen the rule based multilateral trading system. He said that some of the developed countries wanted a certain amount of market access before removing the distortions, and this was not possible since “one can negotiate commerce but can’t negotiate subsistence”. 

He said that the Doha Round was the development round of the WTO and the development content must not be deindustrialisation and destabilising farmers. The developing countries will do 2/3rd of what the developed countries do, but for that they need to know what the EU, US and the other developed countries offer. They can not move forward in giving market access without a reduction in the overall trade distorting support (OTDS). He particularly stressed that he would not like anyone to subsidise the Indian consumers and destabilise the agricultural farmers, as that would be impinging on the livelihood security of the Indian people. Subsidies and trade flows should be disconnected and both the G20 and the G33, covering almost 90% of the world’s farmers, had presented proposals before the G6 meeting for correcting such trade distortions. The G20 proposal said that developing countries would do 2/3rd of what the developed countries did in market access, but in return ask for a 75-80% removal of trade distortion. Mr Nath added that India supported the G20 proposal in this respect. 

Mr Nath questioned what exactly were the developed countries looking for in terms of industrial market access that were not getting? He pointed out that on the products of developed country trade interest, India’s applied rate of duty were already very low – on all imported products from EU(except for some products like wine and cigarettes), the applied tariff in 2005-06 was 6% and 5.6% on products from the US. 

In the area of services, Mr Nath said, what is on the table is just the opposite of what was there after the Uruguay Round as the EU has moved forward. He added that that in services, too, the US offer was disappointing as they did not offer anything in excess of what they had offered during the previous Uruguay Round. But he said that there was need for a deal in services. The issue was not that of migration since that is not the mandate in GATS. He said that “India has already liberalised unilaterally and can move further, if we can something more in Mode 3 and Mode 4 access”. 

Mr Nath said that the Doha Round is a development round and the leadership lies with the developed countries. Therefore he strongly feels that the needs of the LDCs and countries with only a single commodity have to be addressed, and for that the developing countries must be urged to move forward. He felt that it was also in the interests of the developed countries to sustain development, as future growth would take place in countries which have a larger group of younger people. 

The developed countries should recognise that this round must not impinge on the livelihood security of people. Mr Nath said that he looks forward to developed countries coming back as leaders, with credible offers, based on the architecture which is already there. Only then at the end of this round will we have the necessary development content.

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